BUS606: Operations and Supply Chain Management

Ties across interfirm networks serve as conduits for network actors to access, transmit, or exchange critical organizational resources. Interestingly, the same supply network can have multiple different architectural properties with regard to types and attributes of network ties (i.e., network resources), which is commonly referred to as "multiplexity". Thus, in accounting for interfirm network phenomena, such as supply networks, it is essential to take a network multiplexity approach in order to find "hidden" network architectures. This study considers four different supply network tie types - contractual, transactional, professional, and personal ties - which interlink supply network partners. The first two types, contractual and transactional ties, represent visible network ties for the exchange of tangible network resources, such as goods and services, whereas the remaining two, professional and personal ties, capture the invisible (and mostly intangible) exchange of network resources between supply network partners.

Obviously, a supply network consists of visible ties, such as contracts or deliveries and receipt of goods and services. Contractual ties are written agreements that seek to regulate interfirm transactions by specifying a detailed set of legally binding guidelines on operational requirements, quality monitoring and control, warranty policies, penalties, expected service level, etc. Another type of visible network ties considered is a transactional tie reflecting the amount of monetary exchanges, which have been regarded as a simple but clear manifestation of the economic transactions occurring within interfirm networks. Transactional ties represent the economic interdependence between network members. In other words, a buying firm becomes more dependent on the supplier as the percentage of its total payments to a specific supplier relative to other suppliers increases while the same occurs to the supplier when a greater percentage of its total sales comes from a specific buying firm relative to others. Although the most fundamental element of economic exchanges between supply chain partners, a contractual tie (i.e., a formal written contract between one supply network actor's sourcing partner) by its very nature can both foster and hinder commitment between buyers and sellers. For instance, a stronger contractual tie (i.e., more complete contract) including explicit work-related provisions and prescriptions, can protect buyers from the opportunistic behavior of their counterparts. Viewed from a supplier's standpoint, on the other hand, a strong contractual tie specifying more control and legal rules can serve as a threat when buyers opportunistically utilize it to impose unreasonable terms and conditions on the supplier. In this vein, a transactional tie (i.e., the actual exchange of goods and services) can be established without a formal written contract when both parties share relational norms such as reciprocity, solidarity, and information sharing. This study thus regards the above two visible supply network ties (i.e., contractual and transactional ties) as separate types in which a stronger contractual tie does not necessarily imply more or less economic transactions and vice versa.

Prior network research has pointed out that much of an interorganizational commitment is often formalized at a personal, rather than organizational level, and hence, the arrangement can offer exclusive access to network resources. However, interpersonal and thus invisible ties in supply networks have received relatively less research attention, whereas visible network ties representing economic exchange have been actively discussed in the literature. Thus, this study also considers two invisible network ties (i.e., professional and personal ties) that bridge the supply chain personnel of partnering firms. Professional ties are normally task-oriented and focus on achieving assigned objectives, while personal ties deal more with the social/emotional side of non-work-related interactions and focus on interpersonal likeability. In an SCM context, these invisible ties between purchasing and supply managers play a crucial role in facilitating buyer-supplier cooperation, trust, reputation and image, and subsequent organizational performance. When incorporated with social network analysis, this consideration further enables the inter- and intra-comparisons of different tie types and comparable network indices and consequently can provide invaluable insights concerning the underlying network architecture. Table 1 provides conceptual definitions of the four supply network tie types under consideration and their measurement items used based on the literature.

Table 1. Conceptual definitions, item measures, and related literature for supply network tie types.